Fischer Makes His Withdrawal

Binyamin Rose

Eight years after leaving a high-paying, low-profile job with Citigroup in New York for the relatively low-paying, high-profile job as governor of the Bank of Israel, Stanley Fischer is bowing out as gracefully as he entered, leaving Israel’s economy healthier and more resilient. How did well-mannered Fischer, a British and American-trained economist, tame the Israeli lion?

Wednesday, July 03, 2013

When Stanley Fischer first grabbed the reins as head ofIsrael’s central bank in 2005, no one questioned the credentials of the man the New York Times once called “the closest thing the world economy has to a battlefield medic.”

Fischer’s ascendance was a proud moment for many Jews. The world-class economist who had saved half a dozen countries from financial demise in the 1980s and 1990s was leaving a top job in a major Wall Street firm to make aliyah.

What some people did question — and these are the same questions many potential olim face — was how a well-mannered, well-schooled MIT professor could operate in a land known for informality and an unruly way of doing business, and whether his facility in Hebrew would ever measure up to his mastery of economics.

The answer to those questions seemed eminently clear as Fischer’s tenure drew to its close. Years ago, Fischer would grimace visibly when Israeli reporters held side conversations or interrupted each other during news conferences. However, he remained straight-faced in his final news conference — held last Tuesday morning inJerusalem— calmly asking a radio reporter broadcasting live from the back of the room to tone down. As for mastery of the Hebrew language, Fischer delivered his presentation in perfect Hebrew, asking his top press aide, Dr. Yossi Saadon, to coach him on just one or two words.

Public persona aside, Fischer’s most lasting impressions will be the ones he made onIsrael’s economy, where he graduated from the ranks of a “battlefield medic” to physician’s status, keepingIsraelfrom contracting the same economic plague that had plunged the world into a deep recession once the housing bubble burst in 2007.

However, Fischer would not take sole credit for his remarkable record. “There are two doctors in any economy, the monetary doctors and the fiscal doctors [at the Ministry of Finance] and we both work in tandem,” Fischer said as part of his prepared remarks at his final news conference.

If anyone would know about the delicate relationship between a central bank and a nation’s finance ministry, it would be Stanley Fischer. Before he took the Bank of Israel post, Fischer negotiated with finance ministers from more than a half dozen countries facing emergency financial conditions.

Binyamin Netanyahu was leaving his post as finance minister when Fischer stepped in. Netanyahu had just implemented the first stages of a multiyear cut in income tax rates, so one of Fischer’s first challenges was to make sure the government retained enough money to begin paying down its debt — a measure Fischer insisted was just as crucial toIsrael’s long-term economic health.

Israeldid shave more than 20 percentage points off of its national debt from 2005 to 2013, from 94 percent of GDP to 73 percent. “If you look at this statistic in comparison with most other Western countries, you will find that they all went in the opposite direction,” Fischer told reporters at his final news conference.

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